RPSM09102450 - Technical Pages: Member benefits: An unsecured pension: Review of the unsecured pension limit: Example of the sixty day window
This guidance only covers members who became entitled to an unsecured pension before 6 April 2011. If the member became entitled to their pension on or after 6 April 2011 then see the guidance at RPSM09103500.
An example of using the sixty day window for review of the unsecured pension limit before 6 April 2011 and transition to pension drawdown
Adrian is drawing a pension as an unsecured pension. He commenced drawing the pension on 5 August 2006, aged 60.
His pension years therefore run from,
the first reference period:
- 5 August 2006 to 4 August 2007 (the first pension year)
- 5 August 2007 to 4 August 2008 (the second pension year)
- 5 August 2008 to 4 August 2009 (the third pension year)
- 5 August 2009 to 4 August 2010 (the fourth pension year)
- 5 August 2010 to 4 August 2011 (the fifth pension year)
the second reference period:
- 5 August 2011 to 4 August 2012 (the sixth pension year)
The first formal review is due on 5 August 2011 (the reference date). This is the first day of the first pension year of the second reference period.
The scheme administrator may carry out the calculation based on the position on any day between the 6June 2011 and 5 August 2011. He chooses to make the calculation with effect from 30 June 2011, as that is the date the scheme assets were valued at. So 30 June 2011 is the nominated date.
The calculation will be based on the size of the unsecured pension fund on 30 June 2011 and Adrian’s age on that date, but the new limit on the annual income that may be drawn will apply only from 5 August 2011.
Changes after 6 April 2011:
The member’s new reference period begins shortly after 5 April 2011, but they use the ‘60 day window’ so the review of the pension drawdown limit takes place before 6 April 2011: does this mean the old rules apply to the member’s new reference period?
No, as the member’s current reference period ends and their new reference period starts after 5 April 2011, the new rules will apply to them. The purpose of a review is to set the valuation of the member’s pension drawdown fund for the new reference period and the 60 day window allows them to choose the day on which the valuation should be carried out. But the end and start dates of the two reference periods are not affected by this; they remain unchanged.